Not sure if this is a hint or not in iTunes 7. I have two external drives connected to iTunes in two separate playlists. Rather then have to update each artist in separate playlists, I can do this by simply updating one playlist.

Go to one playlist and add the album art. To modify the second playlist, go to the artist with missing album art in the second playlist, and enter whatever artist name you entered in the other playlist.

Example:
"White Stripes, The" was defined in playlist #1. In playlist #2, it was listed as "The White Stripes." Renaming "The White Stripes" to "White Stripes, The" will pick-up the album art from the other playlist, assuming the albums are the same.